If you have developed a successful business model and brand it may be appropriate to consider expanding through licensing or franchising.
- Franchising involves achieving a successful business model that is profitable, so that another business owner who is granted a licence to use your know-how and business formula can achieve expected returns. For them franchising represents a low risk method of going into business using a tried and tested formula.
- Once you begin to grant franchises, you are responsible for the success of you franchisees, for training them, and constantly improving the processes and systems of the business, so that you effectively move into the franchising business rather than what you initially started out doing.
What does franchising involve?
When you franchise your operations you will give your licensees a licence to:-
- use your trade mark and other elements of your branding
- distribute and sell your goods
- manufacture and distribute products or processes which are patented
- use your confidential information relating to how you structure and implement your business
- education and training programmes you have developed for your business and staff
- use specific software for the business
- Although franchising deals with intellectual property rights, it is primarily a form of business contract.
A franchising contract should be drafted and reviewed on behalf of both parties by experienced lawyers to ensure that both parties’ interests are protected by the contract, and that neither party is exposed to unreasonable commercial risk.